Are you preparing to start a new business? Setting up a business in Canada is easy, but you still have a few steps to follow before you can open your doors. Following a helpful checklist can walk you through how to set up a business in Canada so you can operate smoothly and legally.
Choose the Right Form of Business Ownership
The optimal form of business is the one that fits the management structure you plan to use, as well as your comfort level with various kinds of personal liability. You have several options:
- Sole proprietorship: In this form of business ownership, you own the business yourself and employ people to help you achieve your goals and run the company — you’re also solely responsible for liabilities the company incurs.
- Partnership: This may be the right type of business ownership model if you plan to share ownership of the company with one or more other people.
- Corporation: This type of business is more complex to set up and run, but it provides a level of liability protection that the other business types don’t.
The issue of liability may seem abstract when you start your company, but it can become crucial if problems occur. For example, if someone were to sue your corporation, your personal assets would be protected. If you own a sole proprietorship, though, a lawsuit could come after your home and your other personal assets.
Register Your Business Name
In most provinces and territories, you have to register your business name, no matter what form of business ownership you’ve chosen. If you’re a sole proprietor and you’re using your legal name with no additions, you may be able to avoid this requirement. It’s always a good idea to check with the Provincial Registry in your province or territory to make sure. For a fee, that same office can provide you with details about the registration process.
Register for the Appropriate Canada Revenue Agency Accounts
Registering your business name is the first step. Most businesses in Canada need to register for goods and services tax (GST) and harmonized sales tax (HST). When you’re first starting out, you may be able to waive this requirement, thanks to the Small Supplier exception to the GST/HST requirements. Even if you can waive the requirement, you might want to register for GST/HST anyway. This action allows you to claim back the GST/HST your business pays out in the course of doing business. It also eliminates the surprise “Where’s your GST/HST remittance?” notice from the CRA when you’ve unknowingly made more than the permitted Small Supplier amount.
If you’ve chosen to form your business as a corporation, or plan to hire employees or import and export goods, a register for a Business Number is needed at this stage of the process.
Take Out the Required Permits and Licenses
Are you opening a restaurant? If so, then you’re probably not surprised to learn that you need to take out various permits. Depending on your province or territory, you may need permits or licenses to conduct business activities as diverse as selling tobacco or holding a promotional contest. Fortunately, the government has set up BizPal, a free service to help you determine the permits and licenses you need.
Set Up a Business Bank Account
If you’re asking, “Do I need a business bank account for a sole proprietorship in Canada?” the answer is yes. Your business needs its own bank account providing a clear financial trail for accounting and tax purposes. Keeping personal accounts and business finances separate is always a best practice and helps you avoid trouble.
Set Up Your Accounting System
If you establish your accounting system in conjunction with setting up your business bank accounts, you’re ready to start making and spending money. QuickBooks set-up is easy and makes it possible for you to handle many of the vital financial tasks involved with running a small business, including:
- Keeping your business finances organized and up to date
- Maintaining clear financial records for accounting and tax purposes
- Providing customers with accurate records of transactions they require
- Saving you from paying someone to input months or years of accounting data
Following these basic steps to set up your business properly puts you in position to start building a customer base and selling your products and services. 4.3 million customers use QuickBooks. Join them today to help your business thrive for free.